Political Entrepreneurs

The Economic Engine of Political Change

Among market entrepreneurs — especially in Silicon Valley and other high-tech areas — evaluating mistakes is popular as a learning tool. It is hard to find new and better ways to add value for others — the essence of entrepreneurship — without being a good learner.

Fortunately, an emerging body of resources is providing more information about failure, more stories from which to learn, and more insights on what went wrong. A recent NY Times online commentary provides a host of resources, along with this observation:

“In Silicon Valley, failure is a rite of passage,” … “If you’re not failing, you’re not considered to be innovating enough.”

The article goes on to discuss nonprofits that are trying to be more like Silicon Valley ventures — quick to learn from success and most especially from failure. In addition, the story highlights groups that speak openly about their mistakes, such as the website Admitting Failure, by Engineers Without Borders.

For another resource, check out “The Fail Show” at the Barcelona Developers Conference, a gathering that caters to new technology developers. [Update: Link is now dead. Here is another link, this one to an entire conference dedicated to failure.]

Entrepreneurs such as these learn from the relentless signals of profit and loss in market settings. Similar feedback mechanisms do not function as well in political settings.

This might explain why there aren’t as many conferences about learning from political failure. And yet, there is much to learn.

How can political entrepreneurs learn from the mistakes of the past? How can we improve the chances for reform?

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.189, ch.7)

The most successful entrepreneurs know what they do well, they know the market and the opportunities within it, and they choose those activities that create the most value. This is true in economic as well as political markets.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.178, ch.7)

[W]hen the right elements come together at the right time and place and overwhelm the status quo, it is because special people make it happen. We call them political entrepreneurs.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.176. ch.7)

While we started this book with Danny Biasone saving basketball, we end it with Norman Borlaug saving a billion lives. These stories are not that different. Both faced vested interests, which were reinforced by popular beliefs that things should be a certain way—that is, until a better idea came along.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.174, ch.6)

Because there was a general belief that homeownership was a good thing, politicians found the public with open arms.... Everybody was winning—except Alfred Marshall, whose supply and demand curves were difficult to see through the haze of excitement at the time, and except Friedrich Hayek, whose competition as a discovery procedure was befuddled... In short, once politicians started getting credit for homeownership rates, the housing market was doomed.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.166, ch.6)

Everyone responded rationally to the incentives before them. In short, the rules that guided homeownership changed over time, which in turn changed the incentives of these actors. And bad things happened.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.153, ch.6)

They understood the economics. The ideas had already won in ... the regulatory agency itself. All that remained to be overcome were some vested interests and a handful of madmen in authority.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.146, ch.6)

If the idea for auctions of spectrum use rights had been part of the public debate since at least 1959, why didn’t the relevant institutions change sooner? What interests stood in the way?

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.121, ch.5)

When an academic scribbler comes up with a new idea, it has to resonate well with widely shared beliefs, which in turn must overcome the vested interests at the table. Many forces come together to explain political change, even though it may seem like coincidence of time and place.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.120, ch.5)

It’s the rules of the political game that deserve our focus, not politicians’ personalities or party affiliations.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.119, ch.5)

In short, ideas are a type of higher-order capital in society. Like a society that is poor in capital and therefore produces little consumer value, a society that is poor in ideas and institutions will have bad incentives and therefore few of the desirable outcomes that people want.